Published November 22, 2008
Government pushes to clear credit clog
Easier loans and funding for local companies, with government backing
By CHEN HUIFEN
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AS EXCESSIVE caution on the part of bankers threatens to choke off credit lifelines to local enterprises, the government has stepped in to get loans and liquidity flowing again. It is making available $2.3 billion of funding support to all local outfits, regardless of size, to help them weather the credit crunch.
Besides small and medium enterprises (SMEs), bigger companies with more than 200 employees or fixed assets above $15 million can tap into new credit schemes from next month. Start-ups, too, will have more access to funding.
'If you go by Monetary Authority of Singapore (MAS) data for September, lending activity continues at a reasonably healthy pace,' said Senior Minister of State S Iswaran. 'But there is evidence that local banks have become more cautious in their lending. So although we may not have a credit freeze in Singapore, we are certainly feeling the impact of a credit squeeze.'
A new Bridging Loan Programme has been introduced for companies with more than 10 workers to access credit of up to $500,000.
The default risk will be shared equally by the government and the financial institutions.
'In the overall scheme of things, the package sends a very important signal in terms of the level of confidence the government places in the business community in Singapore.'
- Predeep Menon,
executive director of the Singapore Indian Chamber of Commerce and Industry
The rest of the support package will enhance existing financing programmes administered by Spring Singapore and IE (International Enterprise) Singapore, including the Local Enterprise Finance Scheme (LEFS), the Loan Insurance Scheme and the Internationalisation Finance Scheme. In those programmes, the government will take a greater share of the risk, and loan quantums will be raised.
In LEFS, for instance, the default risk carried by the government will be raised to 80 per cent of the loan sum, up from 50 per cent, if the borrower is an SME. The risk ratio will be 50-50 if the borrower is a larger company.
Mr Iswaran said the measures will help ensure local firms have sufficient resources to continue to operate, invest, trade and internationalise. Some 124,000 companies in Singapore stand to benefit from the new funding. About 107,000 of these are in services, 7,000 in manufacturing and the rest in construction.
Companies and business associations that BT spoke to hope the new funds will instill confidence in the lending system.
Predeep Menon, executive director of the Singapore Indian Chamber of Commerce and Industry (SICCI), said banks are now curtailing corporate credit lines with little regard for a client's track record or credibility.
'For smaller enterprises, the new funds will be lifelines,' he said. 'And in the overall scheme of things, the package sends a very important signal in terms of the level of confidence the government places in the business community in Singapore.'
Association of Small and Medium Enterprises (ASME) president Lawrence Leow said the package is timely, 'as economic and business conditions have deteriorated very quickly in a short time'.
'While we believe the higher loan quantums and increased government risk-sharing of defaults should stimulate financing, we hope the banks will start easing on credit and will be more willing to consider loan applications and shorten loan processing time,' he said.
Several business players called for measures to cut costs, or tailored programmes for sectors that have been beaten down.
Orient Express Lines managing director Mahesh Sivaswamy said new loan schemes will do little for his company if demand does not pick up.
Phillip Overmyer, chief executive of the Singapore International Chamber of Commerce (SICC), said he is disappointed there has been no cut in the GST rate, which he believes would help stimulate consumption.
'But this is just the first step,' he said. 'The government will probably have more things to announce in January. Having moved the Budget forward is also an encouraging sign.'
Leonard Tan, managing director of search engine solutions provider PurpleClick, hopes for a corporate tax cut.
'If the government can reduce the corporate tax for one or two years or, alternatively, allow us to pay the taxes cumulatively in later years, it could help tide us through,' he said.
The $2.3 billion funding support package is backed by a loan line of $3.9 billion. Mr Iswaran said more resources would be made available if the take-up rate exceeds expectations.
With additional reporting by Theodora Kee
Saturday, 22 November 2008
Published November 22, 2008
Citi ponders painful choices as shares plunge
Beleaguered banking giant said to be weighing merger, sale of assets, fund raising
By ANDREW MARKS
NEW YORK CORRESPONDENT
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FIRST, it was Bear Stearns' turn to ignite a crisis in the financial markets, followed by the mortgage giants Fannie Mae and Freddie Mac, and then Lehman Brothers and AIG. Now, it appears that it's Citigroup's turn.
NOT SO MERRY CHRISTMAS
Citigroup has sold tens of billions of dollars' worth of risky assets and announced plans to eliminate 52,000 jobs by next June
Just a few short months ago, Citi was the largest American bank by market capitalisation. Now, fears that it does not have the capital reserves to survive many more rounds of write-offs have sent the global banking behemoth's shares into a precipitous plunge over the last week. In four days, it has lost more than half its value, culminating in a 26 per cent plunge on Thursday.
A Citigroup spokesman had no comment to make, but published reports said Citi executives were huddling yesterday morning to discuss all strategic alternatives to raise cash, including sale of assets, or hitching up with another bank. Possible partners could include Morgan Stanley, Goldman Sachs, or State Street Bank.
The fear that one of the most important banking institutions in the world - with literally trillions of dollars of other financial companies' money tied to its operations - may collapse sent ripples through the stock market, pulling down all the major US banks on the New York Stock Exchange and reigniting the flames of the financial crisis to levels even higher than the worst seen in the days following Lehman Brothers' bankruptcy.
After another late-afternoon plunge sent stocks to another day of stunning losses on Thursday, the Dow Jones Industrials has been halved since achieving its record high little more than a year ago, and has essentially given up all of its gains of the past decade, falling to levels not seen since 1997.
The bluechip index gained 131 points at the opening bell yesterday. But by 10am, the index had retreated, registering a modest gain of just six points at 7,558.
Citigroup, which has registered four consecutive quarters of losses and has already had to write off more than US$20 billion, has been feeling the pressure of investors worrying that it cannot handle the additional losses expected from credit cards, mortgages and even commercial real estate loans that could overwhelm its efforts to slash costs and add deposits. The group has sold tens of billions of dollars' worth of risky assets, improved its capital position and announced plans to eliminate 52,000 jobs by next June.
'We are entering 2009 in a strong position, much stronger than we entered 2008,' CEO Vikram Pandit said in a speech to employees this week. 'We will be a long- term winner in this industry.'
But the selling has got so bad - reminiscent, in fact, of the runs on shares of Bear Stearns last spring and Lehman Brothers in September - that the once seemingly unassailable bank is now desperately looking for ways to raise capital, including finding a possible merger partner or raising cash in the coming days to arrest a sharp slide in the firm's stock price.
'Citi executives keep saying they've got the reserves to weather the storm of write-offs, but by falling below US$5, they've fallen into a much more serious peril,' noted Marc Pado, chief market strategist at Cantor Fitzgerald. 'Many mutual funds and institutional investors - in particular, pension funds - must unload shares of Citigroup to comply with investment guidelines if its shares remain below US$5 by year-end,' he said.
'Everybody's too big to fail now, especially Citi, but investors have to deal with the real possibility that another big government bailout could significantly dilute or even wipe out current shareholders,' said Mr Pado.
On Thursday, Citigroup officials began pushing Securities and Exchange Commission officials to reinstate the so-called uptick rule, which made it more difficult for professional short-sellers to short Citigroup's stock.
Citigroup is hardly alone among the major US banks in its distress. Several big banks' shares have also slumped, including Bank of America, JPMorgan, Goldman Sachs and Wells Fargo.
Citi ponders painful choices as shares plunge
Beleaguered banking giant said to be weighing merger, sale of assets, fund raising
By ANDREW MARKS
NEW YORK CORRESPONDENT
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FIRST, it was Bear Stearns' turn to ignite a crisis in the financial markets, followed by the mortgage giants Fannie Mae and Freddie Mac, and then Lehman Brothers and AIG. Now, it appears that it's Citigroup's turn.
NOT SO MERRY CHRISTMAS
Citigroup has sold tens of billions of dollars' worth of risky assets and announced plans to eliminate 52,000 jobs by next June
Just a few short months ago, Citi was the largest American bank by market capitalisation. Now, fears that it does not have the capital reserves to survive many more rounds of write-offs have sent the global banking behemoth's shares into a precipitous plunge over the last week. In four days, it has lost more than half its value, culminating in a 26 per cent plunge on Thursday.
A Citigroup spokesman had no comment to make, but published reports said Citi executives were huddling yesterday morning to discuss all strategic alternatives to raise cash, including sale of assets, or hitching up with another bank. Possible partners could include Morgan Stanley, Goldman Sachs, or State Street Bank.
The fear that one of the most important banking institutions in the world - with literally trillions of dollars of other financial companies' money tied to its operations - may collapse sent ripples through the stock market, pulling down all the major US banks on the New York Stock Exchange and reigniting the flames of the financial crisis to levels even higher than the worst seen in the days following Lehman Brothers' bankruptcy.
After another late-afternoon plunge sent stocks to another day of stunning losses on Thursday, the Dow Jones Industrials has been halved since achieving its record high little more than a year ago, and has essentially given up all of its gains of the past decade, falling to levels not seen since 1997.
The bluechip index gained 131 points at the opening bell yesterday. But by 10am, the index had retreated, registering a modest gain of just six points at 7,558.
Citigroup, which has registered four consecutive quarters of losses and has already had to write off more than US$20 billion, has been feeling the pressure of investors worrying that it cannot handle the additional losses expected from credit cards, mortgages and even commercial real estate loans that could overwhelm its efforts to slash costs and add deposits. The group has sold tens of billions of dollars' worth of risky assets, improved its capital position and announced plans to eliminate 52,000 jobs by next June.
'We are entering 2009 in a strong position, much stronger than we entered 2008,' CEO Vikram Pandit said in a speech to employees this week. 'We will be a long- term winner in this industry.'
But the selling has got so bad - reminiscent, in fact, of the runs on shares of Bear Stearns last spring and Lehman Brothers in September - that the once seemingly unassailable bank is now desperately looking for ways to raise capital, including finding a possible merger partner or raising cash in the coming days to arrest a sharp slide in the firm's stock price.
'Citi executives keep saying they've got the reserves to weather the storm of write-offs, but by falling below US$5, they've fallen into a much more serious peril,' noted Marc Pado, chief market strategist at Cantor Fitzgerald. 'Many mutual funds and institutional investors - in particular, pension funds - must unload shares of Citigroup to comply with investment guidelines if its shares remain below US$5 by year-end,' he said.
'Everybody's too big to fail now, especially Citi, but investors have to deal with the real possibility that another big government bailout could significantly dilute or even wipe out current shareholders,' said Mr Pado.
On Thursday, Citigroup officials began pushing Securities and Exchange Commission officials to reinstate the so-called uptick rule, which made it more difficult for professional short-sellers to short Citigroup's stock.
Citigroup is hardly alone among the major US banks in its distress. Several big banks' shares have also slumped, including Bank of America, JPMorgan, Goldman Sachs and Wells Fargo.
Published November 22, 2008
Temasek plans pay cut, sees prolonged slump
Still, it also aims to expand workforce 15% in next 2 years
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(Singapore)
TEMASEK Holdings Pte Ltd, Singapore's investment company, plans to cut salaries and says a worldwide recession may extend beyond 2009. The firm, which oversees US$130 billion, said that senior management has volunteered a 15-25 per cent pay cut. The key managers will provide almost 90 per cent of the savings from the companywide cut, it said in response yesterday to a Bloomberg News query.
'As a long-term investor, we believe this current crisis will throw up tremendous opportunities,' Robert Chong, Temasek's MD of human resources, said. 'Yet, we also recognise the short-term challenges and will adjust our actions appropriately.'
Temasek, led by CEO Ho Ching, is seeking to cut costs amid a slump in financial markets that has wiped out more than US$33 trillion in global stocks this year, hurting the value of its investments. It had bought stakes in Merrill Lynch & Co and Barclays Plc after the credit crisis led to about US$966 billion of writedowns and credit losses and more than 170,000 financial job losses worldwide.
'There's still a lot of uncertainties on the outlook and, certainly, we are going to be in for a couple of lean quarters with the contraction in the US, Japan, Europe and in Singapore,' David Cohen, an economist at Action Economics in Singapore, said.
Singapore lowered its growth forecast for a fourth time this year and said yesterday that the economy may contract in 2009, prompting policymakers to implement more measures to avoid a prolonged slowdown. Temasek has a controlling stake in six of the city's 10 biggest publicly traded companies by value.
'We anticipate a global recession in 2009 and possibly beyond,' Mr Chong said.
The company also aims to expand its workforce by 15 per cent in the next two years, he added. That's part of a longer-term plan to have about 500 employees, he said.
Administrative expenses for the group, which includes Temasek's share of the companies it invests in, rose 6.4 per cent to S$8.6 billion for the year ended March, making up 10 per cent of revenue. Profit doubled for the year to S$18.2 billion as sales of energy and Chinese banking assets countered slowing returns from stockmarket investments. -- Bloomberg
Temasek plans pay cut, sees prolonged slump
Still, it also aims to expand workforce 15% in next 2 years
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(Singapore)
TEMASEK Holdings Pte Ltd, Singapore's investment company, plans to cut salaries and says a worldwide recession may extend beyond 2009. The firm, which oversees US$130 billion, said that senior management has volunteered a 15-25 per cent pay cut. The key managers will provide almost 90 per cent of the savings from the companywide cut, it said in response yesterday to a Bloomberg News query.
'As a long-term investor, we believe this current crisis will throw up tremendous opportunities,' Robert Chong, Temasek's MD of human resources, said. 'Yet, we also recognise the short-term challenges and will adjust our actions appropriately.'
Temasek, led by CEO Ho Ching, is seeking to cut costs amid a slump in financial markets that has wiped out more than US$33 trillion in global stocks this year, hurting the value of its investments. It had bought stakes in Merrill Lynch & Co and Barclays Plc after the credit crisis led to about US$966 billion of writedowns and credit losses and more than 170,000 financial job losses worldwide.
'There's still a lot of uncertainties on the outlook and, certainly, we are going to be in for a couple of lean quarters with the contraction in the US, Japan, Europe and in Singapore,' David Cohen, an economist at Action Economics in Singapore, said.
Singapore lowered its growth forecast for a fourth time this year and said yesterday that the economy may contract in 2009, prompting policymakers to implement more measures to avoid a prolonged slowdown. Temasek has a controlling stake in six of the city's 10 biggest publicly traded companies by value.
'We anticipate a global recession in 2009 and possibly beyond,' Mr Chong said.
The company also aims to expand its workforce by 15 per cent in the next two years, he added. That's part of a longer-term plan to have about 500 employees, he said.
Administrative expenses for the group, which includes Temasek's share of the companies it invests in, rose 6.4 per cent to S$8.6 billion for the year ended March, making up 10 per cent of revenue. Profit doubled for the year to S$18.2 billion as sales of energy and Chinese banking assets countered slowing returns from stockmarket investments. -- Bloomberg
Published November 22, 2008
Tough times spark profit warnings
At least nine companies have raised alarm over weaker showing in the past two weeks
By EMILYN YAP
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COMPANIES continue to issue profit warnings as tough economic conditions, plunging equity markets, foreign currency swings and falling commodity prices erode earnings.
No less than nine firms sounded the alarm over weaker performance in the last two weeks. Just yesterday, JEL Corporation (Holdings) warned that falling stock markets and volatile foreign exchange rates could lead to an impairment to its quoted investments and an exchange loss.
The consumer goods distributor said that 'challenging economic conditions are likely to have a negative impact on the group's markets, and subsequently to its operating performance going forward'.
The selldown in equity markets has also affected Khong Guan Flour Milling. The firm said last week that it had to write down substantially the value of its short-term quoted securities. This led to an unaudited loss for the half year ended Oct 31.
Steel product distributor HG Metal Manufacturing projected a net loss for the fourth quarter ended Sept 30, partly because of foreign exchange losses from the strengthening greenback. The sharp correction in steel prices in the last few months also led to a write-down on its inventory value.
Novo Group has been similarly affected by falling prices of steel and steel-related products. Coupled with shrinking demand for such goods due to the global economic downturn, the supply chain manager is expecting a loss for the second quarter ended Oct 31.
Besides small- and mid-cap companies, even big industry players have seen earnings come under pressure.
Singapore Telecommunications, for instance, highlighted early this month that its Q2 profits will suffer from costs of subsidising Apple's iPhone 3G and lower contributions from overseas units.
The group eventually reported a 12.1 per cent in net profit to $868 million for the quarter ended Sept 30.
With the economy still slowing, the outlook for corporate earnings is unlikely to pick up soon.
'We expect earnings downgrades to continue for the next few quarters,' said a DBS Vickers report yesterday. 'DBS economist has cut Singapore's GDP growth forecast for 2008 to 3 per cent and 1.2 per cent for 2009.'
Tough times spark profit warnings
At least nine companies have raised alarm over weaker showing in the past two weeks
By EMILYN YAP
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COMPANIES continue to issue profit warnings as tough economic conditions, plunging equity markets, foreign currency swings and falling commodity prices erode earnings.
No less than nine firms sounded the alarm over weaker performance in the last two weeks. Just yesterday, JEL Corporation (Holdings) warned that falling stock markets and volatile foreign exchange rates could lead to an impairment to its quoted investments and an exchange loss.
The consumer goods distributor said that 'challenging economic conditions are likely to have a negative impact on the group's markets, and subsequently to its operating performance going forward'.
The selldown in equity markets has also affected Khong Guan Flour Milling. The firm said last week that it had to write down substantially the value of its short-term quoted securities. This led to an unaudited loss for the half year ended Oct 31.
Steel product distributor HG Metal Manufacturing projected a net loss for the fourth quarter ended Sept 30, partly because of foreign exchange losses from the strengthening greenback. The sharp correction in steel prices in the last few months also led to a write-down on its inventory value.
Novo Group has been similarly affected by falling prices of steel and steel-related products. Coupled with shrinking demand for such goods due to the global economic downturn, the supply chain manager is expecting a loss for the second quarter ended Oct 31.
Besides small- and mid-cap companies, even big industry players have seen earnings come under pressure.
Singapore Telecommunications, for instance, highlighted early this month that its Q2 profits will suffer from costs of subsidising Apple's iPhone 3G and lower contributions from overseas units.
The group eventually reported a 12.1 per cent in net profit to $868 million for the quarter ended Sept 30.
With the economy still slowing, the outlook for corporate earnings is unlikely to pick up soon.
'We expect earnings downgrades to continue for the next few quarters,' said a DBS Vickers report yesterday. 'DBS economist has cut Singapore's GDP growth forecast for 2008 to 3 per cent and 1.2 per cent for 2009.'
Published November 22, 2008
Shipping trusts neglected despite strong yields
By VINCENT WEE
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DISTRIBUTION yields of Singapore-listed shipping trusts have risen well above 30 per cent as their unit prices slide amid the global stock market turmoil, yet they remain a neglected segment with poor trading volumes.
Shipping trusts, the first of which made its debut in 2006, function much like real estate investment trusts (Reits) in that they raise capital to purchase assets, in this case ships, which they then rent out. Income from the rentals is distributed to investors quarterly in varying amounts, depending on the payout policy of the individual trust managers.
Unit prices of the three shipping trusts, First Ship Lease Trust (FSLT), Pacific Shipping Trust (PST) and Rickmers Maritime are currently hovering between 30 and 40 cents apiece. At yesterday's closing prices of 42 cents for FSLT, 20 US cents (31 cents) for PST and 39 cents for Rickmers, average dividend yields are about 41.9 per cent, 22 per cent and 35.4 per cent respectively.
FSLT's distribution per unit (DPU) rose to 3.05 US cents (annualised 12.2 US cents) in the recent third quarter from 2.23 US cents in the previous corresponding period and has a projected DPU of 3.17 US cents for the first quarter of next year. Rickmers's DPU rose to 2.25 US cents from 2.14 US cents while PST's per unit payout amounted to 1.1 US cents, up from 1.07 US cents.
These yield rates compare with an average Reits yield of about 10 per cent. In addition, lease tenures for most properties are shorter and thus relatively less stable than that for ships. FSLT's portfolio of vessels, for example, has an average remaining lease life of 8.9 years while PST has an average lease term of seven years and Rickmers, almost eight years. The earliest of these leases comes up for renewal in 2014 for FSLT, 2013 for PST and 2012 for Rickmers.
'Our revenue is derived from the long-term fixed-rate charter contracts we have in place with five of the global top 15 container liner companies,' said Thomas Preben Hansen, CEO of Rickmers's trustee-manager Rickmers Trust Management.
PST Management CEO Alvin Cheng said: 'PST is confident that its long-term charters will continue to provide a stable income stream to the trust.'
But the shipping trusts continue to suffer from lack of investor interest and, with the recent overall market weakness, a fall in unit price as well. FSLT, for example, has fallen by two-thirds from a high of $1.30 while Rickmers has fallen over 70 per cent from $1.40 to their current levels. Average volume has hovered at barely one million units. Sentiment may also have been hit by negative perceptions of the shipping industry's prospects and the container line market in particular.
'We are in the midst of a severe bear market and high yielding shipping trusts have so far not been spared despite their transparent business structures and strong financial performances,' said Mr Hansen. 'Rickmers Maritime has so far exceeded its financial forecast every quarter since IPO and has in place a visible pipeline of growth which is set to further increase the cashflow as the new ships are delivered.'
Shipping trusts neglected despite strong yields
By VINCENT WEE
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DISTRIBUTION yields of Singapore-listed shipping trusts have risen well above 30 per cent as their unit prices slide amid the global stock market turmoil, yet they remain a neglected segment with poor trading volumes.
Shipping trusts, the first of which made its debut in 2006, function much like real estate investment trusts (Reits) in that they raise capital to purchase assets, in this case ships, which they then rent out. Income from the rentals is distributed to investors quarterly in varying amounts, depending on the payout policy of the individual trust managers.
Unit prices of the three shipping trusts, First Ship Lease Trust (FSLT), Pacific Shipping Trust (PST) and Rickmers Maritime are currently hovering between 30 and 40 cents apiece. At yesterday's closing prices of 42 cents for FSLT, 20 US cents (31 cents) for PST and 39 cents for Rickmers, average dividend yields are about 41.9 per cent, 22 per cent and 35.4 per cent respectively.
FSLT's distribution per unit (DPU) rose to 3.05 US cents (annualised 12.2 US cents) in the recent third quarter from 2.23 US cents in the previous corresponding period and has a projected DPU of 3.17 US cents for the first quarter of next year. Rickmers's DPU rose to 2.25 US cents from 2.14 US cents while PST's per unit payout amounted to 1.1 US cents, up from 1.07 US cents.
These yield rates compare with an average Reits yield of about 10 per cent. In addition, lease tenures for most properties are shorter and thus relatively less stable than that for ships. FSLT's portfolio of vessels, for example, has an average remaining lease life of 8.9 years while PST has an average lease term of seven years and Rickmers, almost eight years. The earliest of these leases comes up for renewal in 2014 for FSLT, 2013 for PST and 2012 for Rickmers.
'Our revenue is derived from the long-term fixed-rate charter contracts we have in place with five of the global top 15 container liner companies,' said Thomas Preben Hansen, CEO of Rickmers's trustee-manager Rickmers Trust Management.
PST Management CEO Alvin Cheng said: 'PST is confident that its long-term charters will continue to provide a stable income stream to the trust.'
But the shipping trusts continue to suffer from lack of investor interest and, with the recent overall market weakness, a fall in unit price as well. FSLT, for example, has fallen by two-thirds from a high of $1.30 while Rickmers has fallen over 70 per cent from $1.40 to their current levels. Average volume has hovered at barely one million units. Sentiment may also have been hit by negative perceptions of the shipping industry's prospects and the container line market in particular.
'We are in the midst of a severe bear market and high yielding shipping trusts have so far not been spared despite their transparent business structures and strong financial performances,' said Mr Hansen. 'Rickmers Maritime has so far exceeded its financial forecast every quarter since IPO and has in place a visible pipeline of growth which is set to further increase the cashflow as the new ships are delivered.'
Published November 22, 2008
Woodlands Checkpoint capacity to be expanded
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THE Immigration & Checkpoints Authority (ICA) will spend up to $2.5 million to increase the capacity at Woodlands Checkpoint, as land traffic between Singapore and Malaysia is poised to continue growing.
ICA said yesterday that it would expand the current motorcycle and lorry clearance capacity of the Old Woodlands Checkpoint, which was decommissioned in 2000.
'In the next two years, the integrated resorts and the staging of major events in Singapore such as Apec 2009 and the Youth Olympics will attract significant travel through land checkpoints,' ICA said.
A new customs, immigration and quarantine complex in Johor Baru, set to open next month, may also lead to a faster flow of traffic along the Causeway, ICA said.
The Old Woodlands Checkpoint was replaced by the new one, which was designed to handle 35.2 million vehicles. However, vehicle traffic surpassed that figure within the first year of operation. To ease traffic, ICA re-opened the old checkpoint in July 2007 for clearing arriving motorcycles and in March 2008 for clearing departing lorries. Clearance of both types of vehicles will now be increased further.
Cross-border traffic hit 48.5 million vehicles in 2007.
Woodlands Checkpoint capacity to be expanded
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THE Immigration & Checkpoints Authority (ICA) will spend up to $2.5 million to increase the capacity at Woodlands Checkpoint, as land traffic between Singapore and Malaysia is poised to continue growing.
ICA said yesterday that it would expand the current motorcycle and lorry clearance capacity of the Old Woodlands Checkpoint, which was decommissioned in 2000.
'In the next two years, the integrated resorts and the staging of major events in Singapore such as Apec 2009 and the Youth Olympics will attract significant travel through land checkpoints,' ICA said.
A new customs, immigration and quarantine complex in Johor Baru, set to open next month, may also lead to a faster flow of traffic along the Causeway, ICA said.
The Old Woodlands Checkpoint was replaced by the new one, which was designed to handle 35.2 million vehicles. However, vehicle traffic surpassed that figure within the first year of operation. To ease traffic, ICA re-opened the old checkpoint in July 2007 for clearing arriving motorcycles and in March 2008 for clearing departing lorries. Clearance of both types of vehicles will now be increased further.
Cross-border traffic hit 48.5 million vehicles in 2007.
Published November 21, 2008
Asian currencies crumble under fire
Indian rupee hits record low, rupiah and won plunge; MAS may go for softer Sing $
By LARRY WEE
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(SINGAPORE) Asian currencies came under heavy fire against both the US dollar and Japanese yen yesterday, torpedoed by another heavy Wall Street sell-off that spilled over in bloody fashion into Asian bourses.
Key stock indices fell close to 7 per cent each in Tokyo and Seoul yesterday - and Singapore's STI was the best part of 4 per cent weaker at one stage - after news that Wall Street's Nasdaq composite index had led falls by nosediving 6.5 per cent on Wednesday night.
Traders said that triggered a fresh rush out of Asian currencies yesterday, which forced the Indian rupee to a record low of 50.57 per US dollar, and pressed the South Korean won and Indonesian rupiah to revisit fresh lows not seen since the dark days of the Asian crisis in 1998 - of 1,515.8 won and 12,275 rupiah per US dollar respectively.
Standard Chartered Bank researchers warned on Wednesday that those three currencies as well as the Philippine peso would be vulnerable to renewed attack because of their countries' weak external accounts.
'Current account/trade deficit currencies such as the Korean won, Indian rupee, Indonesian rupiah and the Philippine peso will weaken further as long as the credit crisis is ongoing and foreign investors continue to unwind long positions in local stock markets.'
Indeed, few Asian currencies were spared yesterday, with the notable exception of the Japanese yen and the pegged Hong Kong dollar. For the latter, Hong Kong authorities reportedly sold their currency against the US dollar no less than half-a-dozen times yesterday to prevent the latter from falling through its lowest allowed base of HK$7.75.
Elsewhere, however, the greenback once again recorded fresh 2008 highs of S$1.5334, RM3.6265 and 35.19 Thai baht, while the Australian and New Zealand dollars were hit badly by a double whammy of sharply lower commodity prices and renewed yen strength.
In short, it was the risk aversion story repeated ad nauseum, benefiting the yen and US dollar at the expense of just about everyone else's currency.
Stanchart researchers warned yesterday that strong deflationary forces on the asset and commodity side would be unambiguously negative forces for Asia ex-Japan currencies.
'he likes of Singapore, Hong Kong and Malaysia in particular have high export/GDP ratios and need weaker currencies to offset the hit to their external side - albeit the Hong Kong dollar will remain firmly within its 7.75-85 band,' they said in a research note yesterday.
Yesterday, 100 rupiah was translated to S$0.00127. In other words, each Singapore dollar was worth around 7,879 Indonesian rupiah and 33 Indian rupees.
Indeed, following a sharp fall in the Republic's non-oil domestic exports recently, there has been growing speculation that the Monetary Authority of Singapore (MAS) may be persuaded to announce a further easing in monetary policy via a softer trade-weighted Singapore dollar before the authority's next policy meeting in April 2009.
Some traders and researchers have even warned it could come as soon as today, should the final figure for Singapore's Q3 GDP be much worse than flash estimates of minus 0.5 per cent year-on- year and minus 6.3 per cent quarter-on-quarter.
In Asian trading yesterday, the US dollar eventually closed 1.5 per cent worse off at 95.42 yen but also soared 3.4 per cent to 1,497.8 Korean won.
Elsewhere, it finished about unchanged from Wednesday at S$1.5287 but strengthened a further one and 1.2 per cent to close at 50.42 Indian rupees and 12,050 Indonesian rupiah respectively. Down Under, the Australian and New Zealand units suffered losses of 2.8 and 1.7 per cent - to finish at 62.79 US cents and 53.86 US cents respectively.
Asian currencies crumble under fire
Indian rupee hits record low, rupiah and won plunge; MAS may go for softer Sing $
By LARRY WEE
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(SINGAPORE) Asian currencies came under heavy fire against both the US dollar and Japanese yen yesterday, torpedoed by another heavy Wall Street sell-off that spilled over in bloody fashion into Asian bourses.
Key stock indices fell close to 7 per cent each in Tokyo and Seoul yesterday - and Singapore's STI was the best part of 4 per cent weaker at one stage - after news that Wall Street's Nasdaq composite index had led falls by nosediving 6.5 per cent on Wednesday night.
Traders said that triggered a fresh rush out of Asian currencies yesterday, which forced the Indian rupee to a record low of 50.57 per US dollar, and pressed the South Korean won and Indonesian rupiah to revisit fresh lows not seen since the dark days of the Asian crisis in 1998 - of 1,515.8 won and 12,275 rupiah per US dollar respectively.
Standard Chartered Bank researchers warned on Wednesday that those three currencies as well as the Philippine peso would be vulnerable to renewed attack because of their countries' weak external accounts.
'Current account/trade deficit currencies such as the Korean won, Indian rupee, Indonesian rupiah and the Philippine peso will weaken further as long as the credit crisis is ongoing and foreign investors continue to unwind long positions in local stock markets.'
Indeed, few Asian currencies were spared yesterday, with the notable exception of the Japanese yen and the pegged Hong Kong dollar. For the latter, Hong Kong authorities reportedly sold their currency against the US dollar no less than half-a-dozen times yesterday to prevent the latter from falling through its lowest allowed base of HK$7.75.
Elsewhere, however, the greenback once again recorded fresh 2008 highs of S$1.5334, RM3.6265 and 35.19 Thai baht, while the Australian and New Zealand dollars were hit badly by a double whammy of sharply lower commodity prices and renewed yen strength.
In short, it was the risk aversion story repeated ad nauseum, benefiting the yen and US dollar at the expense of just about everyone else's currency.
Stanchart researchers warned yesterday that strong deflationary forces on the asset and commodity side would be unambiguously negative forces for Asia ex-Japan currencies.
'he likes of Singapore, Hong Kong and Malaysia in particular have high export/GDP ratios and need weaker currencies to offset the hit to their external side - albeit the Hong Kong dollar will remain firmly within its 7.75-85 band,' they said in a research note yesterday.
Yesterday, 100 rupiah was translated to S$0.00127. In other words, each Singapore dollar was worth around 7,879 Indonesian rupiah and 33 Indian rupees.
Indeed, following a sharp fall in the Republic's non-oil domestic exports recently, there has been growing speculation that the Monetary Authority of Singapore (MAS) may be persuaded to announce a further easing in monetary policy via a softer trade-weighted Singapore dollar before the authority's next policy meeting in April 2009.
Some traders and researchers have even warned it could come as soon as today, should the final figure for Singapore's Q3 GDP be much worse than flash estimates of minus 0.5 per cent year-on- year and minus 6.3 per cent quarter-on-quarter.
In Asian trading yesterday, the US dollar eventually closed 1.5 per cent worse off at 95.42 yen but also soared 3.4 per cent to 1,497.8 Korean won.
Elsewhere, it finished about unchanged from Wednesday at S$1.5287 but strengthened a further one and 1.2 per cent to close at 50.42 Indian rupees and 12,050 Indonesian rupiah respectively. Down Under, the Australian and New Zealand units suffered losses of 2.8 and 1.7 per cent - to finish at 62.79 US cents and 53.86 US cents respectively.
Published November 21, 2008
Wednesday rout brings fear of Black Monday
There's no way to measure a bottom from where we stand: fund manager
By ANDREW MARKS
NEW YORK CORRESPONDENT
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THE plunge in US stocks on Wednesday dealt a double blow to Wall Street investors who had been hoping not only that the market had bottomed last month, but that the massive government interventions in the US and abroad had at least stabilised financial markets.
As Wednesday's sell-off took stocks sharply below the Oct 10 market lows that strategists had been calling the bottom, and sunk the major US market indexes to fresh lows not seen in nearly six years, analysts were rushing to reverse their calls for a year-end rebound.
There's a view that even if stocks don't go down sharply by Friday, there is a danger that the market dynamics may already be in place for a 'Black Monday' sort of scenario when traders come back from their weekend break.
As the closing bell sounded on Wednesday and the numbers told the tale of losses - the Dow swooned 5.1 per cent, the S&P 500 6.1 per cent and Nasdaq 6.5 per cent - all talk of a re-testing of bottoms was silenced amid panicked shouts of 'Dow 6,000'.
'We are in free fall in both the economy and the markets. There is simply no way to measure or forecast a bottom from where we stand right now,' said Jim Awad, managing director at Zephyr Capital Management shortly before trading began yesterday morning on the New York Stock Exchange.
The panic that caused blue chips to lose 400 points in the last half-hour of trading on Wednesday retained its tight grip on investors in the early going yesterday.
The Dow skidded within moments of the opening bell, driven lower by disheartening news from the Labor Department that new claims for unemployment benefits jumped last week to a 16-year high.
However, by 11am, the market had reversed course with the Dow up 53.60 points to 8,050.88 and Nasdaq up 17 points to 1,403.42.
The trigger for Wednesday's sell-off was a treacherous combination of more record-breaking economic data that surprised even the most pessimistic of economists and spiking worries of yet another huge corporate financial crisis, as Congress debated the fate of the teetering Big Three automakers and seemed to reject a quick bailout to avoid bankruptcy.
The Census Bureau reported that housing starts declined by 4.5 per cent to an annual rate of 791,000 last month, the largest one-month decline on government records dating back to 1959.
Separately, the Bureau of Labor Statistics reported that its consumer price index fell one per cent last month, due in part to falling energy prices. The CPI's decline was its largest on record. Economists were expecting a decline of 0.8 per cent.
'When you look at the data flow in the last couple weeks, the numbers are slightly worse than expected, but remain largely consistent with the serious recession that most of us are now forecasting,' said Ethan Harris, senior economist at Barclay's Capital.
'What really concerns me is the continued deterioration in the financial and capital markets, despite the government's almost socialistic measures to pry them open,' he said.
Investors, he observed, are rightly upset and fearful that credit spreads are not only not stabilising but they're widening.
'Every week we don't get that stabilisation in the credit markets puts any hope for seeing a bottoming of the economic crisis further and further off,' he added.
Underlying the resurgence of panic in the stock market is the rising sentiment that Treasury Secretary Henry Paulson is steering a rudderless course for stabilising the markets and there is little hope for much-needed additional government stimulus until President-elect Barack Obama takes office in January.
'Paulson's flip-flop with the decision not to use the US$700 billion rescue package to buy the banks' toxic loans really hurt a lot of investors, and now the feeling is we're not going to get a decisive and reassuring government response until Mr Obama takes over,' said Mr Awad.
'That's nearly two months of non-action to look forward to at precisely the time we need action. Given that situation, I won't even begin to forecast how much further stocks will fall until then,' he added, a sentiment that's unfortunately echoing throughout Wall Street.
Wednesday rout brings fear of Black Monday
There's no way to measure a bottom from where we stand: fund manager
By ANDREW MARKS
NEW YORK CORRESPONDENT
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THE plunge in US stocks on Wednesday dealt a double blow to Wall Street investors who had been hoping not only that the market had bottomed last month, but that the massive government interventions in the US and abroad had at least stabilised financial markets.
As Wednesday's sell-off took stocks sharply below the Oct 10 market lows that strategists had been calling the bottom, and sunk the major US market indexes to fresh lows not seen in nearly six years, analysts were rushing to reverse their calls for a year-end rebound.
There's a view that even if stocks don't go down sharply by Friday, there is a danger that the market dynamics may already be in place for a 'Black Monday' sort of scenario when traders come back from their weekend break.
As the closing bell sounded on Wednesday and the numbers told the tale of losses - the Dow swooned 5.1 per cent, the S&P 500 6.1 per cent and Nasdaq 6.5 per cent - all talk of a re-testing of bottoms was silenced amid panicked shouts of 'Dow 6,000'.
'We are in free fall in both the economy and the markets. There is simply no way to measure or forecast a bottom from where we stand right now,' said Jim Awad, managing director at Zephyr Capital Management shortly before trading began yesterday morning on the New York Stock Exchange.
The panic that caused blue chips to lose 400 points in the last half-hour of trading on Wednesday retained its tight grip on investors in the early going yesterday.
The Dow skidded within moments of the opening bell, driven lower by disheartening news from the Labor Department that new claims for unemployment benefits jumped last week to a 16-year high.
However, by 11am, the market had reversed course with the Dow up 53.60 points to 8,050.88 and Nasdaq up 17 points to 1,403.42.
The trigger for Wednesday's sell-off was a treacherous combination of more record-breaking economic data that surprised even the most pessimistic of economists and spiking worries of yet another huge corporate financial crisis, as Congress debated the fate of the teetering Big Three automakers and seemed to reject a quick bailout to avoid bankruptcy.
The Census Bureau reported that housing starts declined by 4.5 per cent to an annual rate of 791,000 last month, the largest one-month decline on government records dating back to 1959.
Separately, the Bureau of Labor Statistics reported that its consumer price index fell one per cent last month, due in part to falling energy prices. The CPI's decline was its largest on record. Economists were expecting a decline of 0.8 per cent.
'When you look at the data flow in the last couple weeks, the numbers are slightly worse than expected, but remain largely consistent with the serious recession that most of us are now forecasting,' said Ethan Harris, senior economist at Barclay's Capital.
'What really concerns me is the continued deterioration in the financial and capital markets, despite the government's almost socialistic measures to pry them open,' he said.
Investors, he observed, are rightly upset and fearful that credit spreads are not only not stabilising but they're widening.
'Every week we don't get that stabilisation in the credit markets puts any hope for seeing a bottoming of the economic crisis further and further off,' he added.
Underlying the resurgence of panic in the stock market is the rising sentiment that Treasury Secretary Henry Paulson is steering a rudderless course for stabilising the markets and there is little hope for much-needed additional government stimulus until President-elect Barack Obama takes office in January.
'Paulson's flip-flop with the decision not to use the US$700 billion rescue package to buy the banks' toxic loans really hurt a lot of investors, and now the feeling is we're not going to get a decisive and reassuring government response until Mr Obama takes over,' said Mr Awad.
'That's nearly two months of non-action to look forward to at precisely the time we need action. Given that situation, I won't even begin to forecast how much further stocks will fall until then,' he added, a sentiment that's unfortunately echoing throughout Wall Street.
Published November 21, 2008
Upside in China property S-chips?
By ARTHUR SIM
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WHILE most Singapore property developers are afflicted by the same predicament - over-supply, low confidence - the Chinese property market is as varied as its landscape.
Take property S-chip CentraLand for example.
Listed here in February, the price of Centra- Land shares at IPO is likely to have priced-in various poor economic data at the time. Even so, its IPO offer price of 50 cents has fallen only 4 per cent since, while share prices of most Singapore-based property developers are more likely to have fallen upwards of 60 per cent.
For the third quarter of 2008, revenue amounted to about 277.4 million yuan (S$62.1 million), recognised from delivery to buyers of 997 units of pre-sold retail and office units in its commercial property project, J-Expo in Zhengzhou.
Located in the Henan province, J-Expo is a wholesale commodities building in the heart of Zhengzhou city, located at the junction of the main road and rail network in central China. In a filing with SGX, CentraLand said Zhengzhou city enjoys good traffic and is an important wholesale centre, especially for women's apparel.
Not many would know this about Zhengzhou, much less know where it is. This being so, CentraLand, which is probably considered more 'exotic' compared to other China property S-chips, is not heavily traded.
Less exotic property S-chips like Yanlord, China New Town Development (CNTD) and Sunshine Holdings are traded more heavily. Their share prices have also fallen dramatically, in line with market movements.
Indeed, since the start of the year, Yanlord, CNTD and Sunshine share prices have fallen 80 per cent, 95 per cent and 92 per cent respectively to very low penny values.
But the paradox is that unlike Singapore (and much of the world) some markets in China, where some of these S-chips have projects, are actually seeing property prices recovering.
Citigroup analysts visiting numerous cities made several conclusions recently. They noted that inner cities like Chongqing and Chengdu looked less affected by the export slowdown and global financial crisis, as their economies are more domestic trade oriented.
In Chengdu, Citigroup added that activity has recovered slightly from the period immediately after the earthquake, but more importantly, it also sees a meaningful difference in terms of sales volume and prices versus the period before the earthquake.
Citigroup did not, however, notice meaningful rebounds in transaction prices and volumes in Shenzhen or Guangzhou, 'and the market is still clouded with the wait-and-see attitude of the potential buyers'.
Citigroup said that in Hangzhou, the provincial capital of Zhejiang province, the situation has been deteriorating, adding: 'As one of China's main export and manufacturing driven provinces, Zhejiang has been significantly impacted by the export slowdown and global financial crisis.'
On the other hand, Citigroup considers Shanghai as one of the most resilient in China, especially for projects located in prime locations. 'We don't see any significant price cuts in the high-end/luxury-end residential projects,' it said, adding that in the past two years, there has also been limited new land supplies in the city centre.
Different Chinese cities also appear to have different property cycles. DTZ Research reveals that property prices in Shanghai peaked at the end of 2005 and then plummeted for a year before rising steadily since the end of 2006.
DTZ's Shanghai property price index rose 40 per cent in Q3 2008 compared with the previous trough in Q4 2006. Prices continued to increased by 3 per cent quarter-on-quarter in Q3 2008 and 5.2 per cent compared with Q4 2007.
In Guangzhou and Shenzhen, however, property prices only peaked in Q4 and Q3 of 2007 respectively. While prices have recovered somewhat in Guangzhou - with the DTZ price index rising 2 per cent since the previous trough - Shenzhen prices have fallen 16 per cent since Q3 2007.
More interestingly, Beijing prices have been increasing for four years, registering an 8.1 per cent quarter-on-quarter increase in Q3 2008.
Each city appears to react to different micro-economic factors like land scarcity, high levels of speculation, or even the efficiency of local governments to implement policy changes (curiously, the Chinese government's relaxation on mortgage lending in October has not had an impact on share prices).
As such, finding value in the Chinese property market takes a lot of work. But at the same time, it should help to separate the wheat from the chaff.
Upside in China property S-chips?
By ARTHUR SIM
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WHILE most Singapore property developers are afflicted by the same predicament - over-supply, low confidence - the Chinese property market is as varied as its landscape.
Take property S-chip CentraLand for example.
Listed here in February, the price of Centra- Land shares at IPO is likely to have priced-in various poor economic data at the time. Even so, its IPO offer price of 50 cents has fallen only 4 per cent since, while share prices of most Singapore-based property developers are more likely to have fallen upwards of 60 per cent.
For the third quarter of 2008, revenue amounted to about 277.4 million yuan (S$62.1 million), recognised from delivery to buyers of 997 units of pre-sold retail and office units in its commercial property project, J-Expo in Zhengzhou.
Located in the Henan province, J-Expo is a wholesale commodities building in the heart of Zhengzhou city, located at the junction of the main road and rail network in central China. In a filing with SGX, CentraLand said Zhengzhou city enjoys good traffic and is an important wholesale centre, especially for women's apparel.
Not many would know this about Zhengzhou, much less know where it is. This being so, CentraLand, which is probably considered more 'exotic' compared to other China property S-chips, is not heavily traded.
Less exotic property S-chips like Yanlord, China New Town Development (CNTD) and Sunshine Holdings are traded more heavily. Their share prices have also fallen dramatically, in line with market movements.
Indeed, since the start of the year, Yanlord, CNTD and Sunshine share prices have fallen 80 per cent, 95 per cent and 92 per cent respectively to very low penny values.
But the paradox is that unlike Singapore (and much of the world) some markets in China, where some of these S-chips have projects, are actually seeing property prices recovering.
Citigroup analysts visiting numerous cities made several conclusions recently. They noted that inner cities like Chongqing and Chengdu looked less affected by the export slowdown and global financial crisis, as their economies are more domestic trade oriented.
In Chengdu, Citigroup added that activity has recovered slightly from the period immediately after the earthquake, but more importantly, it also sees a meaningful difference in terms of sales volume and prices versus the period before the earthquake.
Citigroup did not, however, notice meaningful rebounds in transaction prices and volumes in Shenzhen or Guangzhou, 'and the market is still clouded with the wait-and-see attitude of the potential buyers'.
Citigroup said that in Hangzhou, the provincial capital of Zhejiang province, the situation has been deteriorating, adding: 'As one of China's main export and manufacturing driven provinces, Zhejiang has been significantly impacted by the export slowdown and global financial crisis.'
On the other hand, Citigroup considers Shanghai as one of the most resilient in China, especially for projects located in prime locations. 'We don't see any significant price cuts in the high-end/luxury-end residential projects,' it said, adding that in the past two years, there has also been limited new land supplies in the city centre.
Different Chinese cities also appear to have different property cycles. DTZ Research reveals that property prices in Shanghai peaked at the end of 2005 and then plummeted for a year before rising steadily since the end of 2006.
DTZ's Shanghai property price index rose 40 per cent in Q3 2008 compared with the previous trough in Q4 2006. Prices continued to increased by 3 per cent quarter-on-quarter in Q3 2008 and 5.2 per cent compared with Q4 2007.
In Guangzhou and Shenzhen, however, property prices only peaked in Q4 and Q3 of 2007 respectively. While prices have recovered somewhat in Guangzhou - with the DTZ price index rising 2 per cent since the previous trough - Shenzhen prices have fallen 16 per cent since Q3 2007.
More interestingly, Beijing prices have been increasing for four years, registering an 8.1 per cent quarter-on-quarter increase in Q3 2008.
Each city appears to react to different micro-economic factors like land scarcity, high levels of speculation, or even the efficiency of local governments to implement policy changes (curiously, the Chinese government's relaxation on mortgage lending in October has not had an impact on share prices).
As such, finding value in the Chinese property market takes a lot of work. But at the same time, it should help to separate the wheat from the chaff.
Published November 21, 2008
Rafidah may lose Umno post
Her deputy makes a bid for the women's wing presidency
By PAULINE NG
IN KUALA LUMPUR
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FORMER international trade minister Rafidah Aziz, who lost her Cabinet post this year, may have to relinquish the leadership of the United Malays National Organisation (Umno) women's wing earlier than she had planned.
Ms Rafidah, who had expressed her desire to stay on as president of the wing - until at least June next year - before handing over to her deputy, Shahrizat Abdul Jalil, could now be ousted at the Umno general assembly in March following a decision yesterday by the latter to challenge her for the No 1 spot.
Political observers say that it would not be easy to dislodge Ms Rafidah before she is prepared to go. And even in the event that Ms Shahrizat, who had earlier agreed to the former's transition plan, manages to win the post, they believe that all would not be lost for the veteran former trade minister.
'Knowing Najib, he will use her in an advisory role although not in a ministerial position,' said a corporate observer, in reference to Deputy Prime Minister Najib Razak who is slated to take over as Umno president in March from Prime Minister Abdullah Ahmad Badawi.
Indeed, it is Mr Najib's expected 'ascension' to the top and speculation that Ms Rafidah is angling for a place in his Cabinet that made Ms Shahrizat's supporters concerned that Ms Rafidah might renege on her word in the event that she is made a minister.
One of the world's longest serving trade ministers, Ms Rafidah had been visibly peeved at her omission in the Cabinet after the March general election this year, though she later came around to accepting it. At that time, she said that she would devote more time to her family and to rebuilding Malaysia's dominant party Umno, of which the women's wing accounts for about 36 per cent of its estimated membership of one million. The wing plays a large role in the party and its members are particularly active at mobilising the masses during elections.
Ms Rafidah is not expected to take any challenge lightly, however, and political analysts agree that Ms Shahrizat - a special adviser on women and social development affairs to Mr Abdullah - has more to lose should she fail.
Both have received enough nominations to contest the top position, which has been held since 1984 by Ms Rafidah, apart for the one term, 1996 to 1999.
The long period has allowed her to consolidate her grip on the wing, but many consider the 65-year-old grandmother to have outstayed her welcome and prefer that her deputy be given the opportunity to lead.
And in the way of Umno politics, the considerable influence on party matters still wielded by former prime minister Mahathir Mohamad cannot be discounted, with Dr Mahathir favouring Ms Shahrizat after his fallout with Ms Rafidah over the controversial approved permit (APs) issue in 2005.
Dr Mahathir had been critical of the trade ministry, which was then under her, for issuing thousands of the lucrative APs which are required for importing foreign cars, as the move had badly hit sales at local carmaker Proton.
The issue resurfaced this week when an Opposition lawmaker alleged that Ms Rafidah's relatives had benefited from the lucrative permits. But few believe that the AP issue would matter now, given that it is the potential tussle with Ms Shahrizat that is now taking centre stage.
Rafidah may lose Umno post
Her deputy makes a bid for the women's wing presidency
By PAULINE NG
IN KUALA LUMPUR
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FORMER international trade minister Rafidah Aziz, who lost her Cabinet post this year, may have to relinquish the leadership of the United Malays National Organisation (Umno) women's wing earlier than she had planned.
Ms Rafidah, who had expressed her desire to stay on as president of the wing - until at least June next year - before handing over to her deputy, Shahrizat Abdul Jalil, could now be ousted at the Umno general assembly in March following a decision yesterday by the latter to challenge her for the No 1 spot.
Political observers say that it would not be easy to dislodge Ms Rafidah before she is prepared to go. And even in the event that Ms Shahrizat, who had earlier agreed to the former's transition plan, manages to win the post, they believe that all would not be lost for the veteran former trade minister.
'Knowing Najib, he will use her in an advisory role although not in a ministerial position,' said a corporate observer, in reference to Deputy Prime Minister Najib Razak who is slated to take over as Umno president in March from Prime Minister Abdullah Ahmad Badawi.
Indeed, it is Mr Najib's expected 'ascension' to the top and speculation that Ms Rafidah is angling for a place in his Cabinet that made Ms Shahrizat's supporters concerned that Ms Rafidah might renege on her word in the event that she is made a minister.
One of the world's longest serving trade ministers, Ms Rafidah had been visibly peeved at her omission in the Cabinet after the March general election this year, though she later came around to accepting it. At that time, she said that she would devote more time to her family and to rebuilding Malaysia's dominant party Umno, of which the women's wing accounts for about 36 per cent of its estimated membership of one million. The wing plays a large role in the party and its members are particularly active at mobilising the masses during elections.
Ms Rafidah is not expected to take any challenge lightly, however, and political analysts agree that Ms Shahrizat - a special adviser on women and social development affairs to Mr Abdullah - has more to lose should she fail.
Both have received enough nominations to contest the top position, which has been held since 1984 by Ms Rafidah, apart for the one term, 1996 to 1999.
The long period has allowed her to consolidate her grip on the wing, but many consider the 65-year-old grandmother to have outstayed her welcome and prefer that her deputy be given the opportunity to lead.
And in the way of Umno politics, the considerable influence on party matters still wielded by former prime minister Mahathir Mohamad cannot be discounted, with Dr Mahathir favouring Ms Shahrizat after his fallout with Ms Rafidah over the controversial approved permit (APs) issue in 2005.
Dr Mahathir had been critical of the trade ministry, which was then under her, for issuing thousands of the lucrative APs which are required for importing foreign cars, as the move had badly hit sales at local carmaker Proton.
The issue resurfaced this week when an Opposition lawmaker alleged that Ms Rafidah's relatives had benefited from the lucrative permits. But few believe that the AP issue would matter now, given that it is the potential tussle with Ms Shahrizat that is now taking centre stage.
Published November 21, 2008
Reliance launching Islamic funds in Malaysia
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(MUMBAI) India's Reliance Capital Ltd will launch Islamic funds in Malaysia in about eight months following an approval it got to set up an asset management company in the South-east Asian country, a top official said.
The move by Reliance is part of its plan to expand overseas.
Islamic investing forbids Muslims from receiving interest payments and taking a bet on companies involved in the production or sale of pork, alcohol, tobacco, pornography, gambling and non-Islamic structured finance or life insurance.
Nearly 180 Islamic mutual funds registered for sale in Malaysia and tracked by global fund intelligence firm Lipper managed about US$5 billion at the end of last month.
Demand for Islamic assets is rising in Malaysia, thanks largely to government efforts to grow the industry. Islamic assets account for 16 per cent of Malaysia's total banking assets, according to official figures.
'We have got the approval to incorporate the AMC business,' Vikrant Gugnani, chief executive of Reliance Capital's Indian mutual fund unit, said yesterday.
Malaysia had earlier handed out Islamic fund management licences to Kuwait Finance House and DBS Asset Management, a subsidiary of Singapore's DBS Group. CIMB-Principal Islamic Asset Management, a joint venture between Malaysian lender CIMB Group and US firm Principal Financial Group has also received approval. -- Reuters
Reliance launching Islamic funds in Malaysia
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(MUMBAI) India's Reliance Capital Ltd will launch Islamic funds in Malaysia in about eight months following an approval it got to set up an asset management company in the South-east Asian country, a top official said.
The move by Reliance is part of its plan to expand overseas.
Islamic investing forbids Muslims from receiving interest payments and taking a bet on companies involved in the production or sale of pork, alcohol, tobacco, pornography, gambling and non-Islamic structured finance or life insurance.
Nearly 180 Islamic mutual funds registered for sale in Malaysia and tracked by global fund intelligence firm Lipper managed about US$5 billion at the end of last month.
Demand for Islamic assets is rising in Malaysia, thanks largely to government efforts to grow the industry. Islamic assets account for 16 per cent of Malaysia's total banking assets, according to official figures.
'We have got the approval to incorporate the AMC business,' Vikrant Gugnani, chief executive of Reliance Capital's Indian mutual fund unit, said yesterday.
Malaysia had earlier handed out Islamic fund management licences to Kuwait Finance House and DBS Asset Management, a subsidiary of Singapore's DBS Group. CIMB-Principal Islamic Asset Management, a joint venture between Malaysian lender CIMB Group and US firm Principal Financial Group has also received approval. -- Reuters
Thursday, 20 November 2008
Published November 20, 2008
Tune Money upbeat on next year's results
Tony Fernandes says finance house will wipe out RM9.6m accumulated losses
By S JAYASANKARAN
IN KUALA LUMPUR
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TONY Fernandes, a major shareholder of budget finance house Tune Money, said yesterday that the company would wipe out its accumulated RM9.6 million (S$4.1 million) in losses by next year and that its shareholders would invest more money into the firm to enter markets such as Indonesia and Thailand.
Mr Fernandes confirmed that the firm's chief executive officer and 5 per cent shareholder Tengku Zafrul Tengku Aziz was resigning but denied that it was due to any misunderstanding between shareholders. He told reporters at a press conference that Tengku Zafrul's departure was always on the cards as he had already done the preliminary groundwork in a very regulated industry and the business now needed a more 'marketing-oriented' chief executive.
Mr Fernandes also said that the firm was not downsizing but was merely delaying the implementation of some of its new products such as unit trusts because 'now is not the time to launch a unit trust'.
Tune Money is a spinoff from the wildly successful AirAsia, Asia's largest budget airline. Inspired by its success, Mr Fernandes, AirAsia's founder, moved to create a host of other budget services including Tune Money and Tune Hotels, a chain of low-cost hotels that are extremely popular in Malaysia and which Mr Fernandes described yesterday as 'profitable from the word go'.
Its business model is simple. Mr Fernandes thought that the reason why financial services such as insurance, for example, were expensive was the fact that they involved middlemen who took a commission off the top and so racked up costs.
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He thought the way out of that was the Internet, so Tune Money began by selling insurance policies online that offered cheaper premiums simply because they cut out the middleman.
The insurance coverage and debit cards offered by Tune Money came through CIMB, Malaysia's largest investment bank, which also holds a 25 per cent interest in Tune Money, which was capitalised at RM26.6 million back in 2006.
Tune's other shareholders are Lim Kean Onn (8 per cent), Kallimullah Hassan (8 per cent) and Mr Fernandes and his allies (49 per cent). Mr Lim and Mr Kallimullah are partners in ECM-Libra, one of Malaysia's smaller investment banks. Incidentally, Tengku Zafrul used to head Avenue Assets, a stockbrokerage that was bought over by ECM-Libra almost three years ago.
Mr Fernandes said that all cash calls - almost RM4 million to date - had been subscribed fully by the firm's shareholders but the latest cash call (RM5 million) has not been done 'because it has been postponed'.
Despite the injections, the firm has been bleeding. According to documents lodged with the Companies Commission, Tune Money made a net loss of RM8.6 million for the year ended December 2007 following a loss of slightly over RM1 million for the previous year.
Even so, Mr Fernandes painted a rosy future for the company, pointing out that the firm already has 25,000 customers for its debit cards. 'We intend to push this vigorously because it has synergies with our business in AirAsia where many of our customers do not have credit cards at all.'
Indeed, the Tune Money director said that the company could make as much as RM14 million in profit next year and 'we think we will make some really good money in 2010'.
Published November 20, 2008
ANALYSIS
Malaysia consumption not out for the count
Government measures expected to buoy spending
By PAULINE NG
IN KUALA LUMPUR
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THE signs are not good. Survey after survey paints a bleak picture of consumer sentiment, sparking fears that consumption as an engine of economic growth is under threat. But the sense of doom and gloom may just be overblown.
Still selling well: Malaysia's private consumption grew 9 per cent in the second quarter, after 11.7 per cent in the first quarter
Yes, a recent MasterCard consumer confidence survey, conducted in late September to mid-October on 14 Asia-Pacific economies shows that Malaysia was in the bottom half. Among South-east Asian states, it came in second-last, ahead of politically wrecked Thailand which scored 26.2 - the result of political strife and street demonstrations which wore down the Thai middle class, the credit card issuer said.
Malaysia's score of 35.9 for the second half of the year - little changed over the first-half of 36.9 - was far lower than the 62.3 for Singapore, which is already in a technical recession.
Amazingly, even runaway inflation of 28 per cent in September did little to dampen Vietnamese optimism; the nation scored 88.1 - the highest of all Asia-Pacific markets surveyed.
Findings by independent think tanks show the same trend. A Merdeka Centre survey in July found only a quarter of respondents being 'very or somewhat favourable' towards the economy, compared to 59 per cent in February.
Separately, the Malaysian Institute of Economic Research said that 'signs of consumer moderation are becoming more apparent' after its consumer sentiment survey for the third quarter plunged nearly 30 points year-on-year.
But there are still bright spots. Retail sales, which came to US$67.1 billion last year, is still expected to rise 7 per cent to US$71.8 billion this year.
And consumption is still expanding. Private consumption grew 9 per cent in the second quarter, after 11.7 per cent in the first quarter.
One forecast puts 2008 growth at 7.4 per cent, down from some 11 per cent last year. The economist behind the forecast expects the uptrend to continue next year, albeit at a sharply slower pace of 2-3 per cent.
Various indicators - car sales, government tax revenue, imported consumer goods, among others - show that consumer spending is weakening, he said. 'But it is not collapsing.'
The economist also sees growth in the gross domestic product next year, though his forecast of 1.5 per cent is a far cry from official estimates of 3.4 per cent.
Measures including five successive fuel price cuts, highway toll discounts at certain periods, cuts in hypermarket prices, and allowing employees of the nation's biggest pension plan to reduce their monthly contributions by 3 percentage points are expected to buoy consumer spending.
The Employees Provident Fund move is expected to inject at least RM2.5 billion (S$1.06 billion) a month into the economy - even if only half of the members take it up.
The release of third-quarter growth data next week will provide a clearer picture of the challenges ahead.
But let's not jump the gun and allow poor sentiment to become actual distress.
ANALYSIS
Malaysia consumption not out for the count
Government measures expected to buoy spending
By PAULINE NG
IN KUALA LUMPUR
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THE signs are not good. Survey after survey paints a bleak picture of consumer sentiment, sparking fears that consumption as an engine of economic growth is under threat. But the sense of doom and gloom may just be overblown.
Still selling well: Malaysia's private consumption grew 9 per cent in the second quarter, after 11.7 per cent in the first quarter
Yes, a recent MasterCard consumer confidence survey, conducted in late September to mid-October on 14 Asia-Pacific economies shows that Malaysia was in the bottom half. Among South-east Asian states, it came in second-last, ahead of politically wrecked Thailand which scored 26.2 - the result of political strife and street demonstrations which wore down the Thai middle class, the credit card issuer said.
Malaysia's score of 35.9 for the second half of the year - little changed over the first-half of 36.9 - was far lower than the 62.3 for Singapore, which is already in a technical recession.
Amazingly, even runaway inflation of 28 per cent in September did little to dampen Vietnamese optimism; the nation scored 88.1 - the highest of all Asia-Pacific markets surveyed.
Findings by independent think tanks show the same trend. A Merdeka Centre survey in July found only a quarter of respondents being 'very or somewhat favourable' towards the economy, compared to 59 per cent in February.
Separately, the Malaysian Institute of Economic Research said that 'signs of consumer moderation are becoming more apparent' after its consumer sentiment survey for the third quarter plunged nearly 30 points year-on-year.
But there are still bright spots. Retail sales, which came to US$67.1 billion last year, is still expected to rise 7 per cent to US$71.8 billion this year.
And consumption is still expanding. Private consumption grew 9 per cent in the second quarter, after 11.7 per cent in the first quarter.
One forecast puts 2008 growth at 7.4 per cent, down from some 11 per cent last year. The economist behind the forecast expects the uptrend to continue next year, albeit at a sharply slower pace of 2-3 per cent.
Various indicators - car sales, government tax revenue, imported consumer goods, among others - show that consumer spending is weakening, he said. 'But it is not collapsing.'
The economist also sees growth in the gross domestic product next year, though his forecast of 1.5 per cent is a far cry from official estimates of 3.4 per cent.
Measures including five successive fuel price cuts, highway toll discounts at certain periods, cuts in hypermarket prices, and allowing employees of the nation's biggest pension plan to reduce their monthly contributions by 3 percentage points are expected to buoy consumer spending.
The Employees Provident Fund move is expected to inject at least RM2.5 billion (S$1.06 billion) a month into the economy - even if only half of the members take it up.
The release of third-quarter growth data next week will provide a clearer picture of the challenges ahead.
But let's not jump the gun and allow poor sentiment to become actual distress.
Published November 20, 2008
Commodity stocks suffer losses for a second day
Straits Asia, Noble and Olam plunge more than 12%; key commodities index falls sharply
By CONRAD TAN
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MAJOR commodity-related stocks here were pummelled for a second day yesterday as investors fretted over slowing economic growth and falling demand worldwide for energy, metals and agricultural resources.
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Shares in Straits Asia Resources, which owns two coal mines in Indonesia, plunged 14.5 cents or 19.3 per cent to 60.5 cents, extending its two-day loss to 25.3 per cent.
Chief executive Richard Ong bought one million shares in the open market at an average price of 67.6 cents yesterday, raising his direct stake in the company to 0.592 per cent from 0.501 per cent, according to a Singapore Exchange exchange filing. Straits Asia's shares have slumped 80.6 per cent this year.
Olam International, which supplies agricultural commodities worldwide, saw its shares fall 12.3 per cent to 93 cents, extending its loss since Monday's close to 23.8 per cent. Since the start of the year, its shares have fallen 66.9 per cent.
Shares of Hong Kong-based Noble Group, which manages the global supply chains of various raw materials in food, energy and metals, fell 14.9 per cent to 74 cents, down 23.3 per cent in the past two days. The shares are off 63.5 per cent this year.
In a report yesterday, Credit Suisse analyst Haider Ali cut his target price for Straits Asia to $1.20 from $1.25, while keeping his 'neutral' rating on the stock, citing lower estimates of coal production in the next two years due to a delay at one of its mines.
And earlier this week, Merrill Lynch downgraded its rating on Olam to 'underperform' from 'neutral' and slashed its target price for the stock to $1 from $2.60, after Olam's management said it would cut the proportion of debt on its balance sheet.
This means Olam's aggressive pace of growth in recent years will have to slow, said Merrill Lynch analyst Chong Han Lim. 'By our estimates, the reduced gearing would lower sales-generating potential 30-40 per cent. The revision appears voluntary, but the company is probably making the announcement ahead of the inevitable - bankers tightening lending standards.'
Prices across a broad range of commodities have been hurt badly by a severe deterioration in the global economic outlook, which has triggered fears among investors that the earnings of companies such as Noble and Olam will suffer.
The Reuters/Jefferies CRB index, a global benchmark for commodity prices, fell on Tuesday to its lowest close since Sept 26, 2003. The index, which tracks 19 commodities including aluminium, crude oil, gold and soya beans, has collapsed almost 50 per cent from its all-time peak on July 2 this year, as the financial crisis wreaked havoc on the world's biggest economies.
Physical trade of commodities has also been damaged by the seizing up of credit markets, with firms finding it harder and more expensive to get letters of credit - a common method of payment for goods in international trade - as banks shy away from guaranteeing payments.
International trade is expected to slump 2.5 per cent next year, the first decline since 1982, hurt by shrinking demand and a sharp contraction in trade finance, the World Bank warned last week.
Published November 20, 2008
It's a matter of integrity for directors
By LYNETTE KHOO
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THE new initiatives by the Singapore Institute of Directors (SID) are a welcome move.
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Of particular interest are its plans to enhance training for directors and provide a searchable directors register on its website so that companies can broaden the search for members on their boards.
This is certainly a step forward in addressing the issues raised on the independence and effectiveness of independent directors.
Several listed companies have recently run into corporate governance issues, and a spate of independent directors and chief financial officers have quit this year. Some directors have also been charged with failing to discharge their duties with reasonable diligence, as happened in the AirOcean and Chuan Soon Huat cases.
Amid the current market turmoil, the relevant question now is whether directors are adequately trained to deal with the new complexities of the economy and of corporate activities.
Independent directors sit on boards to safeguard corporate accountability, and their role is increasingly important in times of such crisis. They should, among other things, understand the terms of credit agreements and the transactions that companies enter into, raising the red flag if undue risk is taken.
But despite their onerous duties, directors place training rather low on their priority list. A recent survey by SID has found that only one in four directors attends training and out of those who do, only 25 per cent attended training not exceeding four hours a year.
For directors who serve on many boards, there is also the question of whether they can effectively discharge all their responsibilities, given the limited time and resources.
And when companies fall back on their 'old boys' network in their search for directors or when independent directors serve for a long time, market perception of directors' independence becomes even fuzzier.
SID's initiatives have recognised these issues. Directors can soon receive more training under SID on specific issues such as risk management, internal controls and roles of the various board committees, as well as technical courses on the standards of principle-based reporting. This would help directors keep up with changes in the industry and regulatory landscape.
With the online searchable register of directors, companies can also have a wider pool of directors to consider, away from their usual networks. Casting a wider net may also give them a higher chance of getting quality directors.
Such initiatives are certainly in order. But it is unclear how much change they will bring about. After all, directors could have sought out existing training programmes had they wanted to.
But it would be a shame if regulators needed to be called in to usher directors into training rooms or even set a limit on the number of boards they can sit on. Instead, the onus should fall on companies and directors themselves to do their own stock-take.
A quota on directorships, akin to the limit imposed by the Malaysian regulator, may not necessarily serve its purpose here, since different directors have varying degrees of commitment and board roles, as well as willingness to commit the hours.
'It all depends on the size of companies they are sitting on and their roles,' says NUS Associate Professor Lan Luh Luh, co-director of the Corporate Governance & Financial Reporting Centre. 'If they are chairmen for all the audit committees and nomination committees, then five boards would already be too much.'
She notes that there are also an increasing number of professional directors, who are retired accountants, auditors or lawyers, who have been advising companies on their boards for a long time and are now doing it full- time. For them, sitting on many boards would not be an issue, unlike directors who hold full-time jobs elsewhere.
So, it looks like there is no clear-cut approach to this. Self-assessment is thus the key. Directors sitting on many boards should always consider at any point in time if they are wearing too many hats. It is hence laudable that SID is coming up with an online evaluation service for companies and directors. This would provide some litmus to directors' effectiveness.
Hopefully, with the SID initiatives, more directors will take it upon themselves to take up courses and review their board commitments.
After all, by signing their names on the dotted line, directors must be prepared to be counted on to discharge their duties with due care.
Published November 20, 2008
Desperate plea as US car giants run on near empty
US GDP could take a 4% hit if the Detroit Three go bust in Q1 2009
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(WASHINGTON) Senate Republican leader Mitch McConnell pressed lawmakers to expedite US$25 billion in previously approved auto loans as US car company executives returned to Congress for the second straight day to plead for aid.
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McConnell said loans approved last year to help pay for retooling auto plants to build fuel-efficient cars can be altered to fund auto-company operations.
'This is a proposal which I believe has support from both sides of the aisle and actually has the potential to pass right now and not next year,' the Kentucky Republican said on the Senate floor.
'It is the only proposal now being considered that has a chance of actually becoming law.'
Support has waned for a Democratic plan to help the automakers with funds from the recently approved US$700 billion bank-rescue fund. That idea is opposed by President George W. Bush and Senate Republicans, making it unlikely there are enough votes to overcome a presidential veto.
General Motors Corp. chief executive Richard Wagoner, Ford Motor's Alan Mulally and Robert Nardelli of Chrysler LLC testified on Wednesday at a House Financial Services Committee hearing after telling a Senate panel Tuesday they need US$25 billion to keep operating.
'Without fresh capital, we project that GM may not have sufficient liquidity to make it to year end,' Deutsche Bank AG analysts including Rod Lache in New York wrote in a note to investors.
GM, the biggest US automaker, said on Nov 7 that it may run out of operating cash as soon as this year and will be 'significantly short' of its needs by mid-2009 without new money or a turnaround in the auto market.
Senator Robert Casey, a Pennsylvania Democrat, said yesterday that he hoped to get an aid plan passed this week, though a vote now on the Democrats' proposal 'would not be successful'. He said that he would be open to the Republican proposal.
Automakers 'might be willing to go along with' speeding up the Energy Department loans, Senate Banking Committee chairman Christopher Dodd, a Connecticut Democrat, told reporters after a hearing yesterday. The idea would likely face opposition from House Speaker Nancy Pelosi, a California Democrat, he said.
Senate Majority Leader Harry Reid said yesterday that any plan to use the Energy Department loans for the aid isn't 'going very far in our caucus'.
GM tumbled 33 US cents, or 10.7 per cent, to US$2.76 at 10.29 am. in New York Stock Exchange composite trading, while Ford slid 16 US cents, or 10 per cent, to US$1.52.
Senator Carl Levin of Michigan, who helped write the Democratic legislation, urged lawmakers to reach a compromise. 'One way or another this week we have to merge these two paths and provide the bridge loans,' he said.
GM's Wagoner told Dodd's committee Tuesday the US economy would suffer a 'catastrophic collapse' if domestic carmakers fail. Three million jobs would be lost within the first year, personal income would drop by US$150 billion and government tax losses would total US$156 billion over three years, he said.
GM needs US$10-12 billion, according to Wagoner, Ford needs US$7-8 billion, said Mr Mulally, and Chrysler is seeking US$7 billion, Mr Nardelli told the panel. Chrysler burned US$3 billion in cash in the third quarter and had US$6.1 billion remaining at the end of the period, Mr Nardelli said.
A first-quarter 2009 bankruptcy of the automakers could cause US gross domestic product to shrink by at least 4 per cent as US car production would slide by 30 to 35 per cent, according to an analysis by Deutsche Bank. Unemployment would jump to between 8 per cent and 8.25 per cent, the analysis showed. The rate currently is 6.5 per cent. -- Bloomberg
Published November 20, 2008
More companies may privatise in gloomy market
By LYNETTE KHOO
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(SINGAPORE) There could be more companies taking the road to privatisation given the poor value ascribed to them by continued market battering.
King's Safetywear is being delisted today and Courts Singapore will soon be taken off the trading board as the curtains draw down on their takeover offers.
Industry players say there is a pipeline of companies looking to delist and buyers looking to privatise listed companies.
Some privatisations could be due to consolidation in certain sectors as margins are shaved.
'There will be some who will be privatised simply because their trading prices are at such low levels that it only makes sense, especially for majority shareholders who have been thinking about this for a long time,' said Stamford Law director Ng Joo Khin.
'If this irrational market condition continues, there will be more people who will be more than willing to cash out,' he added.
King's, which manufactures and markets industrial safety footwear, received an exit offer from Safe Step Group Ltd (SSGL) at 43.8 cents in cash for each share in September.
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Its shares were suspended after the takeover offer closed on Tuesday. Safe Step's stakeholdings, including valid acceptances, reached 98.95 per cent, triggering a mandatory takeover for the remaining shares it did not already own.
The offer price represented a 12.31 per cent premium over King's last traded price of 39 cents before the announcement.
Also in September, Courts Singapore received a takeover offer from Singapore Retail Group (SRG), which had raised its stake in Courts to 90.03 per cent, at 55 cents per share. By yesterday, SRG had received valid acceptances of 8.52 per cent, bringing its stakeholdings to 98.55 per cent. But SRG is extending the closing of its offer from yesterday to tomorrow as its stakeholding is still short of the 99 per cent threshold to exercise mandatory takeover of the remaining shares.
Another company heading for privatisation is Colex Holdings, whose financial woes led to a scheme of arrangement with majority shareholder Bonvests Holdings. The SGX-listed investment holding firm, which holds 77.36 per cent of Colex, offered to pay 14 cents for each target share.
Bargains have emerged from the indiscriminate market sell-offs and privatisation becomes 'a very distinct possibility', observed Himanshu Shah, president and chief investment officer of US-based fund Shah Capital Management. More companies may go private if the market continues to head down.
Besides privatisation, some companies may also exercise share buybacks to lend support to their share prices. These shares could be kept as treasury shares to be offered to investors at a certain price or to employees as share options, Mr Ng said.
Meanwhile, the takeover offer by Star Publications (Malaysia) for Cityneon will close today. By Tuesday, Star's stakeholding in Cityneon, including valid acceptances, was 98.12 per cent.
Cityneon shares have been suspended after the public float fell below the 10 per cent threshold. But it is not the intention of the offeror to delist the company and it will take necessary measures to maintain Cityneon's listing, said ANZ Singapore director Loy Chia. ANZ is the adviser for the deal.
Yellow Pages (Singapore), which dropped out of the bidding war for Cityneon after Star raised its bid from 58 cents to 61 cents, sold its 39.24 per cent stake to Star.
Wednesday, 19 November 2008
Published November 19, 2008
More economic boosts may be on the way
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(KUALA LUMPUR) Malaysia may introduce more measures to stimulate economic growth and counter the worsening global financial crisis, Deputy Prime Minister Najib Razak said yesterday.
The government earlier this month announced a RM7 billion (S$2.9 billion) stimulus programme, warning that growth would slow substantially in 2009.
'We are open to additional measures from time to time ... we are watching and monitoring the situation very carefully and closely,' Mr Najib said, according to the state Bernama news agency.
Mr Najib, who is also finance minister, said last week that the government has the capacity to introduce more stimulus packages but that it would not allow the budget deficit to expand further.
The government has already widened its deficit forecast for 2009 to 4.8 per cent, from 3.6 per cent predicted in August, due to the additional government spending.
Mr Najib said the government was confident of achieving its growth target of 5.0 per cent for 2008 and 3.5 per cent for 2009, by ensuring strong domestic demand.
And he said the government is open to further liberalisation.
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'We must look into some of our domestic regulatory requirements that can be liberalised and streamlined so that we can facilitate the ease and the cost of doing business in Malaysia for domestic and foreign investors,' he said.
The US$2 billion spending package, reaped from savings on reduced oil subsidies, is to be spent on 'high-impact' projects including roads, schools and low-cost housing. -- AFP
Published November 19, 2008
Two more Islamic fund management licences
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(KUALA LUMPUR) The Securities Commission has granted Islamic fund management licences to two more foreign companies, Deputy Prime Minister Najib Razak announced yesterday.
The latest licences were issued to India's leading fund management company Reliance Capital Asset Management and to Kuwait-based Global Investment House, he said.
In addition, Mr Najib said, leading firms based in Malaysia, such as Prudential, were using the country as their regional centre for Islamic fund management activities, reaffirming the confidence in it as an international Islamic financial centre.
'There are also several other leading firms being reviewed by the Securities Commission for licences,' he said in his address at the opening of the 5th Kuala Lumpur Islamic Finance Forum (KLIFF 2008).
The event was organised by the Centre for Research and Training and co-hosted by the Labuan Offshore Financial Services Authority and the Halal Industry Development Corporation in collaboration with Dow Jones Islamic Market Indexes, the International Institute of Islamic Finance and the law firm of Hisham, Sobri & Kadir.
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This year, the KLIFF 2008 offers an integrated basis for promoting an Islamic financial system dialogue among speakers and delegates to foster the orderly development of an efficient, competitive, sound and innovative Islamic finance in a rapidly changing global environment.
At a press conference later, Mr Najib, when asked if more licences would be issued, said: 'There are other things but we will announce it when the time comes.
'There is much interest in identifying Malaysia as the hub for Islamic finance,' he said, adding that he did not want to pre-empt anything. -- Bernama
Published November 19, 2008
Bursa to launch new trading platform
System may go 'live' as early as Dec 1
By PAULINE NG
IN KUALA LUMPUR
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The Malaysian stock exchange will launch a new equities trading platform next month that is expected to be more accessible, efficient, transparent and scalable. This will make any integration with overseas markets easier, should the proposed common trading platform with Asean bourses eventuate.
The RM100 million (S$42.5 million) Bursa Trade Securities (BTS) will replace the current 18-year old Score system - which suffered a major glitch in July that resulted in almost a day's loss of trade - and comes almost a year after it was implemented for the derivatives market.
Riding on the BTS platform, the derivatives market itself had a hiccup in September, though on a much smaller scale.
Bursa Malaysia chief executive Yusli Mohamed Yusoff said that problems can be expected from time to time, but the BTS back-up system should allow for recovery of data within stated time frames.
Problems can emerge in two areas - hardware and software. And in these circumstances, the exchange has two resumption scenarios.
If a major disruption occurs before the start of a trading day, trading will resume on that same day. If it happens during a trading day, resumption will take place on the next business day.
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An Asean common stock exchange initiative involving six nations - Malaysia, Singapore, Indonesia, Thailand, Philippines and Vietnam - calls for the creation of a more inter-linked platform that will allow traders to trade more easily, Mr Yusli said at a BTS briefing yesterday.
He confirmed that a proposed common trading platform between the Singapore and Malaysian bourses, which has been bandied about for several years, 'has been shelved'.
Mr Yusli, whose contract has been extended for another year, according to industry executives, said that a full dress rehearsal for BTS will be conducted with all market participants on Nov 29, and that barring any problems, the system will go 'live' on Dec 1.
Features of BTS include real-time and continuous matching of orders, rather than in 10-second batches under Score, and transparent pre-opening prices.
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